Correlation Between GACM Technologies and Mrs Bectors

Can any of the company-specific risk be diversified away by investing in both GACM Technologies and Mrs Bectors at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GACM Technologies and Mrs Bectors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GACM Technologies Limited and Mrs Bectors Food, you can compare the effects of market volatilities on GACM Technologies and Mrs Bectors and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GACM Technologies with a short position of Mrs Bectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of GACM Technologies and Mrs Bectors.

Diversification Opportunities for GACM Technologies and Mrs Bectors

0.6

Correlation Coefficient

GACM Technologies  Mrs Bectors

Poor diversification

The 3 months correlation between GACM and Mrs is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Mrs Bectors Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mrs Bectors Food and GACM Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GACM Technologies Limited are associated (or correlated) with Mrs Bectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mrs Bectors Food has no effect on the direction of GACM Technologies i.e., GACM Technologies and Mrs Bectors go up and down completely randomly.

Pair Corralation between GACM Technologies and Mrs Bectors

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.49 times more return on investment than Mrs Bectors. However, GACM Technologies Limited is 2.06 times less risky than Mrs Bectors. It trades about -0.3 of its potential returns per unit of risk. Mrs Bectors Food is currently generating about -0.37 per unit of risk. If you would invest  98.00  in GACM Technologies Limited on October 6, 2024 and sell it today you would lose (6.00) from holding GACM Technologies Limited or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GACM Technologies Limited  vs.  Mrs Bectors Food

GACM Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GACM Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, GACM Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mrs Bectors Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mrs Bectors Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GACM Technologies and Mrs Bectors

The main advantage of trading using opposite GACM Technologies and Mrs Bectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GACM Technologies position performs unexpectedly, Mrs Bectors can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mrs Bectors will offset losses from the drop in Mrs Bectors' long position.

The idea behind GACM Technologies Limited and Mrs Bectors Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.